According to experts, Việt Nam's insurance market currently still has a lot of room for development. According to the Ministry of Finance statistics, the insurance penetration rate, calculated by insurance premiums per GDP, in Việt Nam in 2022 was only 2.6 percent.
Contrary to the current quietness of the life insurance industry, the non-life insurance industry has seen large acquisition deals with foreign investors.
Both Vietnam National Aviation Insurance JSC (VNI) and Saigon - Hanoi Insurance (BSH) late last month announced as their strategic shareholder Korea’s DB Insurance Co., Ltd (DBI). Accordingly, BSH shareholders finalized a contract to transfer 75 percent of BSH shares to DBI. At the same time, VNI shareholders also approved a plan for DBI to transfer 75 million VNI shares, equivalent to 75 percent of VNI charter capital.
Another foreign investor Pyn Elite Fund has aggressively bought Military Insurance Company (MIC) shares to become a major shareholder of the company with an ownership of 13.9 million shares, equivalent to 8.1 percent of charter capital.
Besides these deals, the Vietnamese market has seen many other M&A activities in the insurance industry in recent years, such as VPBank’s purchase of an additional 47.85 million OPES insurance shares to increase its ownership ratio to 98 percent of charter capital, and Tasco’s purchase of 100 percent of Groupama Vietnam's capital and changed its name to Tasco Insurance.
According to experts, Việt Nam's insurance market currently still has a lot of room for development. According to the Ministry of Finance statistics, the insurance penetration rate, calculated by insurance premiums per GDP, in Việt Nam in 2022 was only 2.6 percent.
By 2023, due to the crisis of confidence in the life insurance sector, this penetration rate is estimated to have decreased to about 2.2. By 2025, this rate is expected to increase to 3.5 percent.
Meanwhile, according to statistics from the Organisation for Economic Cooperation and Development (OECD), the penetration rate in developed countries such as the US and the UK can be up to 12 percent. Some neighbouring countries such as Singapore and Malaysia also recorded penetration rates many times higher than that of Việt Nam.
A Vietnamese person on average spent about VNĐ2.3 million for insurance in 2023. Compared to 2017, the average insurance premium per capita has increased more than twice.
In 2023, despite a 12.5 percent decrease in life insurance premium revenue to nearly VNĐ156 trillion, the non-life insurance sector kept increasing by 2.4 percent to VNĐ71.1 trillion.
Health insurance and motor vehicle insurance, which were the two products contributing the most to non-life insurance premium revenue last year, still have a lot of growth potential, especially in the context of rising incomes and population aging trends.
With rapidly rising incomes and the growing middle class, the need to travel by car could become a big driver of motor vehicle insurance premiums. According to data from the International Organization of Motor Vehicle Manufacturers (OICA), in Việt Nam, for every 1,000 people, 55 people own cars. In particular, Việt Nam has the fastest-growing car ownership rate in the world. In the period from 2015 to 2020, this rate increased by 17 percent yearly.
Regarding health insurance, the population aging and the growing middle class are becoming the main drivers for this sector. In 2023, revenue from the above two insurance groups slowed due to the weakening economy, but in previous years, the average growth rate of these two insurance groups was in the double digits.
On average, in the period from 2012 to 2023, insurance premium revenue of the non-life sector grew by 11 percent yearly.
(VNS)